India must seize its chance to cement ties with Malaysia as Mahathir Mohamad seeks to counter China's trade hegemony

It is time India seriously engaged veteran politician and Malaysia’s new Prime Minister Mahathir Mohamad. The 93-year-old Mahathir’s unexpected second innings in Malaysia’s highest political office promises to be very interesting, particularly for his country’s relationship with China. He is currently on a five-day official tour of China, first since becoming prime minister. He is not shy about expressing his opinions.

One of the major reasons attributed to the stunning electoral triumph of the Opposition coalition he formally led was the rising national debt and gross financial mismanagement of former prime minister Najib Razak and his family. Another one was the China factor. While outside the circle of power, Mahathir’s stinging criticism of Chinese investment deals with Malaysia during his predecessor’s tenure underpinned his foreign policy agenda. Throughout his electoral campaign, he maintained that he would renegotiate those agreements with China which were found lopsided against Malaysia.

Malaysia prime minister Mahathir Mohamad. Reuters

Ever since he has returned to power in May, with his physical and intellectual faculties surprisingly intact, Malaysians have witnessed unprecedented domestic political changes along with an independent-minded and pragmatic approach to international diplomacy. Much to Beijing’s dismay, the Mahathir government has taken the bold step of suspending many high-profile Chinese investments deals, igniting prospects of shaking Southeast Asia’s geopolitical landscape. India must seize this opportunity.

Chinese president Xi Jinping’s grand geopolitical bet – the Belt and Road Initiative (BRI) – had received extremely warm reception under the previous scandal-tainted government led by Razak. In particular, Chinese investments in the East Coast Railway (ECR) and Melaka Gateway became the centrepiece of the BRI. In fact, the ambitious ECR project – whose 85 percent cost is financed by Chinese soft loans with the rest coming from Malaysian lenders – has been envisaged as a viable alternative to the Strait of Malacca and the South China Sea. Projected as a “game changer” by the previous government, the ECR would connect Malaysia’s east coast to Port Klang on the west coast. Now, the Chinese companies handling the ECR project have been handed suspension notices. The Melaka Gateway project, another multi-billion harbour project built on artificial islands that will include a new deep-sea port, is also under scanner. Mahathir has said: “We don’t think they are viable. So if we can, we would like to just drop the projects.”

The South China Sea is a controversial issue among many ASEAN countries and China. Mahathir’s vocal stance on the South China Sea has indicated that he would like Malaysia to become more assertive on the issue. He has been very blunt in expressing his dissatisfaction over attempts being made to militarise the South China Sea, warning that warships cannot be permanently stationed there. According to Mahathir, “We are all for ships, even warships, passing through, but not stationed here. It is a warning to everyone. Don’s create tension unnecessarily.”

Many renowned Malaysians have also criticised Forest City and other real estate projects built by Chinese companies for Chinese homebuyers as a type of neo-colonialism. While the Malaysian desire for Chinese economic and infrastructural assistance is real, so are concerns over Chinese investment. Mahathir’s concerns on the viability of China’s grand connectivity projects are not unfounded, and they only vindicate India’s apprehensions regarding China’s misuse of sovereign debt to bend other states to its will.

It has been pointed out that the BRI is a modern-day version of the predatory practices used against China in the colonial period, which began with the Opium Wars of the mid-nineteenth century and ended with the Communist takeover in 1949. With huge infrastructure projects, China is simultaneously addressing overcapacity at home by boosting exports while advancing its strategic interests by securing natural resources and promoting the international use of its currency.

Mahathir does not want Malaysia to become another victim of China’s debt-trap diplomacy, which has threatened Sri Lanka’s sovereignty. Sri Lanka, unable to pay the huge debt to China, has recently handed over its strategically located Hambantota port to China under a 99-year lease arrangement. Kenya’s severe debt to China is now threatening to send its economy into an irreversible tailspin, with loan repayments to Chinese State-owned banks skyrocketing to mammoth proportions. The list of countries trapped in the Chinese debt has been expanding by the day. Mahathir may have realised that if corrective steps are not taken, Xi’s promise of the “great rejuvenation of the Chinese nation” will further erode Malaysian sovereignty.

Over the last one decade, China has emerged as Malaysia’s largest trading partner, with bilateral trade expected to exceed $100 billion at the end of this year. China’s economic and political footprint in Malaysia has been growing over the years. According to an estimate, around $2.36 billion went from China to Malaysia in 2017, marking an increase of 350 percent from 2013. Optimists believe that trade ties between the two countries are too big to fail. Mahathir has also clarified that he is not against China and is only interested in redressing abnormalities. Malaysia is a trading nation, and cannot afford to stop doing business with China. But by re-examining Chinese investments in Malaysia, Mahathir seeks to ‘reset’ the tone of bilateral relations.

China is also conscious of the dangers inherent in allowing the trust deficit to widen. It is trying to build a new relationship with the Mahathir government so that stalled projects could be restarted at the earliest. Recently, Beijing had despatched State Councillor and Foreign Minister Wang Yi, and vice-minister of the international department of the Communist Party of China’s Central Committee Guo Yezhou to Kuala Lumpur. Now, red carpets have been rolled out for Mahathir who arrived in China on August 17 for a five-day visit.

Amid escalating trade and security tensions with Washington and growing suspicions in the Western world regarding China’s evolving strategic ambitions, pragmatists in Beijing are trying to convince the communist leadership to fine-tune China’s increasingly aggressive foreign policy approach. Moreover, Beijing does not have many options but to take a more unassuming stance to win over neighbouring countries. China’s recent overtures to India and Japan need to be viewed as a part of this strategy, and Malaysia is likely to benefit from this shift. Mahathir’s government is cash-strapped from the endemic corruption of the Najib era, and his desire to renegotiate Chinese projects is very much understandable.

Mahathir was a feared strongman during his more than two decades as prime minister until 2003. His leadership brought economic prosperity to the nation which gained independence from British rule in 1957 and lifted many Malay families from poverty. The dominant Malay community defines its identity with strong reference to the Islamic faith, though Malaysia is a pluralistic society with many ethnicities and religions living together.

Indians in Malaysia are referred to those people who have ethnic origins in South Asia. In fact, Mahathir is also of Indian origin; his paternal ancestors migrated to Malaya from Kerala in the late 19th century. But Mahathir always championed the cause of Malay rights to emphasise his Malay identity. However, last year, a former deputy prime minister took a dig at Mahathir’s Indian ancestry, alleging that Mahathir was identified as “Mahathir a/l Iskandar Kutty” on his identity card. The word “a/l” – meaning “son of” – is a naming convention used by people of Indian origin, whereas ethnic Malays identify as “bin”, which also means “son of”. In her response to the controversy, Mahathir’s daughter did not deny her Indian heritage, arguing that Mahathir’s grandfather – Iskandar – had married into a prominent Malay family.

The revival of Mahathir’s ‘Look East’ policy is also an extension of the China factor. His first state visit was to Japan in June 2018, followed by a second visit in August 2018. Mahathir’s first overseas trip to Tokyo was both symbolic as well as indicative of his determination to ease dependence on China and to boost Malaysia’s bargaining power. Mahathir is very keen to revive the East Asia Economic Caucus (EAEC), an idea first mooted by him decades ago but Japanese hesitation and American opposition had nipped it in bud. Its reinvention will rebalance the geopolitical game in Southeast Asia. Mahathir wants the creation of EAEC with Japan in the lead, and India and China as partners. Japan’s image in Malaysia is more positive than China’s. The strong trade and investment ties between the two are also underpinned by the Malaysia-Japan Economic Partnership Agreement. Mahathir’s manoeuvring to secure low-cost capital and investments from Japan is set to trigger a strategic re-balancing with huge geopolitical implications. Given India’s strategic proximity with Japan, New Delhi would welcome Tokyo playing a bigger role in the region.

As India’s interests and capabilities grow, New Delhi’s vigorous attempts to ‘Act East’ assume particular significance as far as enhancing India’s connectivity to ASEAN is concerned. Prime Minister Narendra Modi has taken several concrete foreign policy steps vis-à-vis Southeast Asia. The India-ASEAN Summit held in January this year when all the 10 leaders of ASEAN joined India’s Republic Day celebrations in New Delhi has taken ties to a new level. The growing acceptability of the ‘Indo-Pacific’ as a strategic concept can further broaden India’s engagement with the east.

Modi cemented India’s ties with three of the most influential Southeast Asian nations a few months ago. Besides visiting Indonesia and Singapore to sign many important deals, he paid a special visit to Kuala Lumpur for a courtesy call on Mahathir. The two leaders were reported to have had a productive exchange of views on strengthening the strategic partnership between their countries. Modi last visited Malaysia in November 2015.

Though Malaysia’s refusal to deport the controversial Muslim preacher Zakir Naik, who is wanted in India for alleged terror activities and money laundering, may have annoyed India’s security agencies, the issue should be treated as a minor irritant in the bilateral relationship which needs to be strengthened further. India’s ‘mission Malaysia’ needs to be bolder and bigger if ASEAN is to be weaned away from China’s orbit.